| • Trump is widely seen regaining the US presidency come Nov 2024 election, despite being infamous for lies and falsehoods -- as well as being a convicted felon. In case you missed it, he was convicted on all 34 counts of falsifying business records in a case recently. • While he certainly will upend US foreign and trade policy, will that have an impact on some segments of the Singapore stock market? • Not improbable. Maybank Kim Eng's head of research ventured his views on what stocks might benefit and which might have incur some negative impact.  Read more below... |
Excerpts from Maybank Kim Eng report
Analyst: Thilan Wickramasinghe
Singapore Strategy
If Trump wins
Risks abound, but Singapore may be a relative winner
| A potential Trump presidential victory could result in an escalation of the US-China trade & tech war, while also raising global tariffs and protectionist policies. Singapore is unlikely to be spared. Yet an existing US-Singapore FTA, a big bi-lateral trade deficit and diversified imports may blunt the sharpest corners. Banks are likely to benefit from facilitating North-South and South-US flows, while industrials could see upside from onshoring and US fiscal stimulus. Manufacturing and Internet could also see opportunities. REITs – especially those with China and FX exposure - may see downside risks. Top Trump 2.0 picks: CSE, OCBC, SEA, STE, UOB. |
| Trump 2.0 could bring dramatic trade policy changes |
Donald Trump’s lead in the polls have widened following the US presidential debate on 27 June. An election victory in November could lead to five potential policy shocks:
| (a) imposing tariffs of >60% on China and blanket 10% on rest of the world; (b) eliminating “deminimis” of $800; (c) imposing tariffs on “currency manipulators”; (d) imposing tariffs on carbon-heavy imports; and (e) revoking China’s Most Favored Nation (MFN) status. Singapore is unlikely to be spared from collateral damage. |
However, a diversified import base, a US-Singapore free trade agreement (FTA), a bilateral trade deficit as a large importer of US services including R&D, IP, and professional & management services could give some buffer.
| REITs face downside risks, manufacturing mixed |
Leading to Trump’s first election, REITS fell 10% over 3-months.
In the current backdrop, increased regional macro & FX uncertainties may increase sector volatility.
REITs with exposure to China and Vietnam (where a widening trade surplus with the US and growing China FDI are risks), could have operational impacts. MLT and MPACT derive 25%-33% of revenues from Greater China.
Companies with sizable Chinese manufacturing bases could face stiffer tariff threats; AZTECH’s main operating footprint is in China.
Recalibration of energy markets - especially alternative energy - could impact executing SCI’s green-energy transition strategy, at least in the short term.
| Opportunities for banks, industrials, internet |
ASEAN could have an upper hand from lower expected tariffs than China (60% vs. 10%).
 "Industrials such as ST Engineering - where 40% of assets are US-based - should benefit from onshoring as well as potential manufacturing and defense spending stimulus. Tech manufacturers such as Frencken, Venture could benefit from trade diversification away from China."--Thilan Wickramasinghe |
This could continue to encourage supply chain shifts from North Asia.
Plus, the US-Singapore FTA may catalyze safe-haven wealth flows.
The banks – especially OCBC and UOB - with sizable ASEAN footprints, USD funding and strong wealth franchises should be key beneficiaries in bridging these flows as well as onshoring flows to the US.
Industrials such as ST Engineering - where 40% of assets are US-based - should benefit from onshoring as well as potential manufacturing and defense spending stimulus.
Tech manufacturers such as Frencken, Venture Manufacturing could benefit from trade diversification away from China.
Separately, SEA’s ASEAN centric positioning could be an advantage as China centric platforms in the US face difficult operating conditions.
Full report here.
